How Do Public Flagship Universities Stack Up in Terms of Merit Aid?

Many flagship institutions are very generous providers of merit aid. But even among these institutions, there are wide disparities in how much this aid is being used.

Our new report, The Out-of-State Student Arms Race," includes a list of the public flagship universities, showing the share of students on their campuses without financial need who are receiving merit aid. You can view this list here.

At the University of Kentucky (UK), for example, 22 percent of its freshmen with no financial need receive merit aid each year. That’s compared to only about 3 percent at the University of North Carolina at Chapel Hill.

What accounts for the difference? “A lot of these policies are driven by where you sit on the food chain, and where you want to get,” says Shirley Ort, UNC’s associate provost and director of scholarships and student aid. Often referred to as a “Public Ivy,” UNC does not need to work nearly as hard as the University of Kentucky to attract top students.

In addition, UNC still reserves the bulk of its seats for students from North Carolina. In fact, public universities in North Carolina have long been prohibited from enrolling more than 18 percent of their students from out of state.

In contrast, at UK, where no similar cap exists, bringing in high-achieving out-of-state students has been a key part of its strategy to raise its rankings so that it can become a Top 20 public research university. To attract these nonresident students as well as to keep the “best and brightest” students from going out of state, the University of Kentucky has almost entirely shifted away from offering pure need-based aid. “Of the nearly $70 million UK gave in institutional aid this past school year, less than 4 percent was earmarked solely for students who need financial help to attend college,” the Lexington Herald-Leader reported last July.

Largely free from such pressures, the University of North Carolina awards its aid based almost entirely on financial need. Under the Carolina Covenant program, which started a little more than a decade ago, the university solely uses grant aid and work study to cover the full financial need of students with family incomes equivalent to 200 percent of the poverty line or less. As a result, low-income students who qualify for admission can attend the school debt-free.

“What has always mattered at Carolina and what continues to matter is that we recruit the best and brightest students, regardless of their financial need,” says Ort. “And our admissions decisions are not influenced by whether a student is full pay. We are completely need-blind.”

Like UNC, the University of California at Berkeley, the University of Virginia, and the University of Washington at Seattle still spend nearly all of their institutional aid dollars on meeting the full financial need of the low-income students they enroll.

But even some of these universities have been feeling pressure to join the fray. In recent years, the University of Virginia has seen its “yield rate” – the proportion of students who enroll in college after being admitted – “gradually decline in some demographic groups,” according to Gregory Roberts, UVa’s dean of admission. “Nationally peers are pursuing admission and aid policies that target our best applicants,” Roberts warned in a presentation that he delivered to the university’s board in August 2012, adding, “We will risk losing top scholars unless we begin to rethink the relationship between admission and financial aid at UVa.”

Few flagship universities have felt the heat of competition more acutely than the University of Illinois at Urbana-Champaign. For nearly a decade, the school has seen its “yield” numbers decline each year, as public universities from other states have swooped in and recruited top Illinois students to their campuses.

Indiana University and the Universities of Iowa, and Missouri have been especially aggressive in going after these students. In recent years, about 20 percent of freshmen at Missouri’s flagship campus have come from Illinois.

“We have to offer admission to more students to fill our class because the competition for top-notch students just keeps getting more intense each year,” Daniel Mann, the director of student financial aid at the University of Illinois, said. “And many times, it is scholarships and financial aid that are being used to compete for those students.”

The university has struggled in part because it was late to embrace merit aid. For most of its history, the school awarded its aid predominantly based on financial need. It wasn’t until the 2011-12 academic year that the university began offering $5,000 and $10,000 merit-based scholarships for incoming students with high test scores.

But even these efforts have not stopped top students from leaving the state. Explaining why the yield rates continued to decline, Phyllis Wise, the university’s chancellor, told the university’s Board of Trustees in 2013, “The No. 1 reason students don’t come is because of money.”

Given dramatic state budget cuts, the university is unlikely to further sweeten the pot anytime soon. “Our big concern in the immediate future is maintaining this level of merit aid in the face of tough economic times in the state,” Charles Tucker, the university’s vice provost for undergraduate education and innovation, said during an interview."